The cryptocurrency market has seen a significant shift in investment patterns with the introduction of Bitcoin Exchange-Traded Funds (ETFs).
Two key players in this space are the Grayscale Bitcoin Trust (GBTC) and a group of nine spot Bitcoin ETFs, collectively known as the “Newborn Nine”. This article aims to provide an in-depth comparison of these entities, their histories, and their impacts on the Bitcoin investment landscape.
Grayscale Bitcoin Trust (GBTC)
Grayscale Bitcoin Trust, also known as GBTC, was launched in 2013 by Grayscale Investments. It was the first publicly traded Bitcoin fund in the United States.
GBTC operated as a closed-end fund without redemptions until its conversion to a spot ETF in January 2024. GBTC shares traded at a significant discount to net asset value during the crypto bear market in the last two years, but that discount vanished in the run-up and finally the conversion to the ETF.
As of March 07, 2024, GBTC had about $28.2 billion in assets under management.
The Newborn Nine
The term “Newborn Nine” was introduced by Bloomberg Senior ETF analyst Eric Balchunas to refer to a group of nine spot Bitcoin ETFs that were launched in January 2024.
These funds have emerged as significant competitors to GBTC, signaling a significant shift of capital within the cryptocurrency ETF landscape. The Newborn Nine includes iShares Bitcoin Trust ($IBIT), Fidelity Wise Origin Bitcoin Trust ($FBTC), and seven others.
As of March 07, 2024, the collective assets under management (AUM) for the recently launched “Newborn Nine” Bitcoin exchange-traded funds (ETFs) have reached a significant milestone, amassing a total of 397,547.377 BTC 🚀💰, equivalent to nearly $27.63 billion.
- iShares Bitcoin Trust ($IBIT): Holds 191,132.099 BTC.
- Fidelity Wise Origin Bitcoin Trust ($FBTC): Holds 122,951.8 BTC.
- ARK 21Shares Bitcoin ETF ($ARKB): Holds 37,623.9 BTC.
- Bitwise Bitcoin ETF ($BITB): Holds 27,751.58 BTC.
- VanEck Bitcoin Trust ($HODL): Holds 4,270.688 BTC.
- Invesco Galaxy Bitcoin ETF ($BTCO): Holds 5,668.14 BTC.
- Franklin Bitcoin ETF ($EZBC): Holds 2,842 BTC.
- Valkyrie Bitcoin Fund ($BRRR): Holds 4,383.17 BTC.
- WisdomTree Bitcoin Fund ($BTCW): Holds 924 BTC.
The Race for AUM
The Newborn Nine has been receiving significant inflows while GBTC has been experiencing significant outflows. This could be attributed to the more competitive conditions offered by the Newborn Nine.
For instance, in the first four days after their approval, the Newborn Nine had an inflow of $2.87 billion, resulting in a $1.24 billion net flow to Bitcoin ETFs. On the other hand, GBTC lost a total of $1.62 billion worth of spot Bitcoin shares in the same period.
As of March 07 2024, the Grayscale Bitcoin Trust (GBTC) held 405,713.1529 BTC, while the newly established U.S. spot Bitcoin ETFs, dubbed the “newborn nine,” collectively held 397,547.377 BTC. If the ETF inflow trend continues, the ETFs will soon surpass GBTC in holdings.
Conclusion
While it’s challenging to predict which ETF will emerge as the king, the current trends suggest that the Newborn Nine, particularly $IBIT and $FBTC, are gaining significant traction. Their competitive fee structures, ease of access, and the growing interest in Bitcoin among institutional and retail investors make them strong contenders.
However, the volatile nature of the cryptocurrency market means that the landscape can change rapidly. Therefore, investors should keep a close eye on these developments and make informed decisions based on their risk tolerance and investment goals.